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ETION LIMITED - Abridged audited consolidated financial statements for the year ended 31 March 2019,note of annual general meeting

Release Date: 01/08/2019 08:34
Code(s): ETO     PDF:  
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Abridged audited consolidated financial statements for the year ended 31 March 2019,note of annual general meeting

Etion Limited
(“Etion” or “the company” or “the Group”)

(Incorporated in the Republic of South Africa)
(Registration Number: 1987/001222/06)
Share Code: ETO
ISIN: ZAE000257739

                 Abridged Audited Consolidated Financial Statements
       for the year ended 31 March 2019 and notice of annual general meeting



                                        (KEY FEATURES)

   -     Revenue increased to R595.9 million from R572.6 million (up 4%)
   -     Gross profit margin increased from 28.3% to 30.3% (up 2%)
   -     EBITDA decreased from R60.7 million to R29.9 million (down 51%)
   -     Profit after tax decreased from R33.4 million to a loss of R2.7 million
         (down 108%)
   -     Headline and Basic Earnings per share decreased from 7.26 cents to a
         loss of 0.53 cents (down 107%)




                                                                        Page 1 of 9
Abridged consolidated statement of financial position
As at 31 March 2019


                                          31 March 2019       31 March 2019   31 March 2018
                                               (Audited)        (Reviewed)         (Audited)
                                                   R’000             R’000             R’000
Assets
Non-current assets                               261 831            264 161           184 569
Property, plant and equipment                     48 455             48 455            50 294
Intangible assets                                191 421            191 421          118 543
Loan to related company                                   -           2 330                  -
Deferred tax asset                                20 945             20 945            14 722
Other financial asset                              1 010              1 010             1 010
Current assets                                   330 613            327 239           285 379
Inventories                                       87 549             90 305            88 276
Loan to related company                            2 330                  -                  -
Trade and other receivables                      163 630            163 630           140 790
Contract assets                                   18 927             16 171                  -
Current tax receivable                             7 566              6 522             5 513
Cash and cash equivalents                         50 611             50 611            50 800
Total assets                                     592 444            591 400           469 948


Equity and liabilities
Equity                                           343 294            343 066          302 446

Share capital                                    259 541            259 541          212 141
Accumulated profit                                83 753             83 525            90 305

Non-current liabilities                           42 542             41 724            32 952
Interest bearing borrowings                       32 968             32 967            27 788
Contract liabilities                                    274             274                  -
Deferred tax liability                             9 300              8 483             5 164
Current liabilities                              206 608            206 610           134 550
Provisions                                         1 890              1 890             5 388
Interest bearing borrowings                       43 522             43 523             9 461
Trade and other payables                         132 175            132 176           110 155
Contract liabilities                              14 918             14 918                  -
Current tax payable                                     970             970                  -
Bank overdrafts                                   13 133             13 133             9 546
Total equity and liabilities                     592 444            591 400           469 948




                                                                               Page 2 of 9
Abridged consolidated statement of comprehensive income

For the year ended 31 March 2019
                                              Year                 Year                  Year
                                            ended                ended              ended
                                    31 March 2019         31 March 2019    31 March 2018
                                         (Audited)          (Reviewed)          (Audited)
                                             R’000                R’000              R’000


Revenue                                    595 939              595 939            572 562
Cost of sales                             (415 326)            (415 325)         (410 379)
Gross profit                               180 613              180 614            162 183
Other operating income                       4 877                4 877              2 276
Administrative and operating
costs                                     (166 360)            (165 151)         (125 787)
Other (losses)/gains                        (8 956)              (8 956)             7 849
Operating profit                            10 174               11 384             46 521
Finance income                               1 717                1 717              1 975
Finance costs                              (11 262)             (11 262)            (6 143)
Profit before taxation                         629                1 839             42 353
Taxation                                    (3 359)              (4 743)            (8 929)
Net (loss)/profit for the
period                                      (2 730)              (2 904)            33 424
Total comprehensive
(loss)/income for the period                (2 730)              (2 904)            33 424
Attributable to:
Equity holders of the company               (2 730)              (2 904)            33 473
Non-controlling interest                                                                 (49)
                                            (2 730)              (2 904)            33 424
Basic earnings per share (cents)             (0.53)               (0.56)                 7.26
Diluted earnings per share
                                             (0.53)               (0.56)                 7.26
(cents)




                                                                           Page 3 of 9
Abridged consolidated statement of cash flows
For the year ended 31 March 2019

                                                    Year          Year            Year
                                                   ended        ended           ended
                                                 31 March     31 March       31 March
                                                     2019         2019           2018
                                                (Audited)   (Reviewed)      (Audited)

                                                   R’000         R’000           R’000
Cash flows from operating
activities
Cash receipts from customers                      561 283      561 283         556 150
Cash paid to suppliers and
employees                                       (527 513)     (527 513)      (555 460)
Cash generated from operations                     33 770        33 770            690
Finance costs                                     (4 668)       (4 668)         (6 143)
Finance income                                      1 717        1 717            1 975
Taxation paid                                    (11 277)      (11 277)       (23 110)
Net cash flow from operating
activities                                         19 542       19 542        (26 588)
Cash flows from investing
activities
Purchase of property, plant and
equipment                                         (2 921)       (2 921)          (4 942)
Proceeds from disposal of
property, plant and equipment                        435           435            1 169
Purchase of intangible assets                    (10 514)      (10 514)         (7 578)
Business combinations, net of
cash acquired                                    (63 103)      (63 103)                 -
Net cash flow from investing
activities                                       (76 103)      (76 103)       (11 351)
Cash flows from financing
activities
Proceeds on share issue                            27 300       27 300                  -
Proceeds from interest bearing
borrowings                                         58 038             -             972
Repayment of interest bearing
borrowings                                       (25 391)       32 647          (5 536)
Net cash flow from financing
activities                                         59 947       59 947          (4 564)
Net (decrease)/increase in cash,
cash equivalents and bank
overdrafts                                          3 386        3 386        (42 503)
Cash, cash equivalents and bank
overdrafts at beginning of year                    41 254       41 254          79 235
Unrealised foreign exchange
adjustment                                        (7 162)       (7 162)           4 522
Cash, cash equivalents and
bank overdrafts at year end                        37 478       37 478          41 254




                                                                          Page 4 of 9
    Abridged consolidated statement of changes in equity
    For the year ended 31 March 2019


                                           Issued
                                            share       Accumulated     Minority
                                           capital    profit/(losses)   interest      Total
                                            R’000              R’000      R’000       R’000
Balance as at 1 April 2017
(Audited)                                 212 141             56 652        229     269 022
Movements during the year
Profit for the year                              -            33 473        (49)     33 424
Buy back of minority interest
                                                                 180       (180)           -
shares in subsidiary
Balance as at 1 April 2018,
                                          212 141             90 305           -    302 446
as previously reported
Adjustment from adoption of
                                                 -            (3 876)          -     (3 876)
IFRS 9, net of tax
Restated balance as at 1
April 2018                                212 141             86 429           -    298 570
Movements during the year
Shares issued as part of the
business combination                       20 100                   -          -      20 100
Shares issued for cash                     27 300                                     27 300
Loss for the year                                             (2 904)                (2 904)
Balance as at 31 March
                                          259 541             83 525           -    343 066
2019 (Reviewed)




                                           Issued
                                            share       Accumulated     Minority
                                           capital    profit/(losses)   interest      Total
                                            R’000              R’000      R’000       R’000
Balance as at 1 April 2017
(Audited)                                 212 141             56 652        229     269 022
Movements during the year
Profit for the year                              -            33 473        (49)     33 424
Buy back of minority interest
                                                                 180       (180)           -
shares in subsidiary
Balance as at 1 April 2018,
                                          212 141             90 305           -    302 446
as previously reported
Adjustment from adoption of
                                                 -            (3 822)          -     (3 822)
IFRS 9, net of tax
Restated balance as at 1
April 2018                                212 141             86 483           -    298 624
Movements during the year
Shares issued as part of the
business combination                       20 100                   -          -      20 100
Shares issued for cash                     27 300                                     27 300
Loss for the year                                             (2 730)                (2 730)
Balance as at 31 March
                                          259 541             83 753           -    343 294
2019 (Audited)




                                                                             Page 5 of 9
Abridged consolidated segment report
For the year ended 31 March 2019

                                                                  Year                  Year                 Year
                                                                ended                  ended               ended
                                                            31 March        31 March 2019              31 March
                                                                2019                                       2018
                                                           (Audited)            (Reviewed)          (Restated*)
                                                                                                      (Audited)
                                                                R’000                  R’000                R’000
Segment revenue
Etion Digitise: Safety and Productivity
                                                                95 819                95 819               77 035
Solutions
Etion Create: Original Design Manufacturing                   206 565                206 565              235 775
Etion Connect: Digital Network Solutions                      246 748                246 748              277 547
Etion Secure:Cyber Security Solutions                                                                           -
                                                              106 967                106 966
(LawTrust)
Eliminations                                                  (60 160)              (60 159)             (17 795)
Total                                                          595 939               595 939              572 562

Segment profit/(loss)
Etion Digitise: Safety and Productivity
                                                                 (834)                  (834)              (8 276)
Solutions
Etion Create: Original Design Manufacturing                     20 188                20 189               38 375
Etion Connect: Digital Network Solutions                        13 267                13 267               30 588
Etion Secure:Cyber Security Solutions
                                                                 5 412                  5 373                       -
(LawTrust)
Eliminations                                                    20 869                22 117                 6 255
Sub total                                                       58 902                60 112               66 942
Corporate costs                                               (48 728)              (48 728)             (20 421)
Finance costs                                                 (11 262)              (11 262)               (6 143)
Finance income                                                   1 717                  1 717                1 975

Profit before taxation                                             629                  1 839              42 353

Financial position
Assets                                                        592 444                591 400              469 948
Etion Digitise: Safety and Productivity
                                                                93 185                95 956               91 570
Solutions
Etion Create: Original Design Manufacturing                   205 108                278 520              235 627
Etion Connect: Digital Network Solutions                      162 904                134 740              142 645
Etion Secure:Cyber Security Solutions
                                                              119 045                 52 853                        -
(LawTrust)
Corporate                                                       12 202                29 331                      106

Liabilities                                                   249 150                248 334              167 502
Etion Digitise: Safety and Productivity
                                                                30 485                30 092               24 922
Solutions
Etion Create: Original Design Manufacturing                     80 807                80 246               97 108
Etion Connect: Digital Network Solutions                        69 140                66 887               45 470
Etion Secure:Cyber Security Solutions
                                                                29 987                27 845                        -
(LawTrust)
Corporate                                                       38 731                43 264                        2

* Due to the material increase of R60,1 in intersegment transactions during the current financial year the
Group has revised the manner in which it reports segment information for the four business segments.
Intersegment transactions are now eliminated on a gross basis and not directly from the results of the business
segment to which it relates. The comparative information for the 2018 financial year has been restated.


                                                                                                  Page 6 of 9
NOTES TO THE FINANCIAL INFORMATION
1. Restatement of reviewed results for the year ended 31 March 2019

    The reviewed financial results for the year ended 31 March 2019 which was released on SENS
    on 25 June 2019, has been restated due to the following items:
        -   The reclassification of work in progress in respect to contacts with customers
            previously included under inventory on the Statement of Financial Position to contract
            assets, arising from the implementation of IFRS 15.
        -   The reclassification of loans to related parties from non-current assets to current
            assets due to the nature of the repayment terms.
        -   The incorrect treatment of an eliminating journal entry processed upon consolidation
            which has resulted in a net movement of R0.2m in the Statement of Comprehensive
            Income and related movements in current tax receivable and deferred tax liability in
            the Statement in Financial Position.
        -   Separate disclosure of the proceeds from interest bearing borrowing and repayments
            made during the year on the Statement of Cash Flows.
        -   Minor rounding differences on individual figures with the finalisation of the financial
            statements.

    As a result of the aforementioned, Headline and Basic Earnings per Share has improved from
    a loss of 0.56 cents to a loss of 0.53 cents (107% reduction from prior year).

    There were no material changes to the Statement of Cash Flows and hence there was no
    change to any of the key indicators that relate to this. However, while cash generated from
    operations remained unchanged, due to the changes in the Statement of Comprehensive
    Income, the movements in working capital changes has been affected. The effect on the
    individual line items are contained in the notes below.



  1.1 Notes to cashflow statement


In the note “cash generated from operations” the changes are as follows:

                                                        Year               Year         Difference
                                                       Ended              Ended
                                               31 March 2019      31 March 2019
                                                   (Audited)         (Reviewed)

                                                         R’000               R’000           R’000
Profit before tax                                          629               1 839          (1 210)
Adjustments For:
Depreciation and amortisation                            19 687              19 687               -
Interest income                                         (1 717)             (1 717)               -
Finance costs                                            11 262              11 262               -
Increase in provision for slow moving and
obsolete raw materials                                  (1 766)             (1 766)               -
Increase/(decrease) in provision for
impairment of trade receivables                           3 204              3 204                -
Loss on sale of property, plant and
equipment                                                    13                  13               -
Operating lease straight line adjustment                  1 414               1 414               -
(Decrease)/increase in provisions                       (3 498)             (3 498)               -
Unrealised foreign exchange differences -
cash and bank equivalents                                 7 162              7 162                -
Unrealised foreign exchange differences -
debtors                                                    (66)                (66)               -
Unrealised foreign exchange differences -
trade creditors                                           3 499              3 498                1

                                                                                        Page 7 of 9
Changes in Working Capital
Inventories                                               (6 474)            (9 230)            2 756
Contract assets                                           (1 131)              1 625          (2 756)
Trade and other receivables                                 6 455              6 680            (225)
Trade and other payables                                  (7 256)            (8 690)            1 434
Contract liabilities                                        2 353              2 353                -
Cash generated from operations                             33 770             33 770                -


STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION


The summary consolidated financial statements are prepared in accordance with the requirements
of the JSE Limited Listings Requirements for abridged reports, and the requirements of the
Companies Act applicable to summary financial statements. The Listings Requirements require
abridged reports to be prepared in accordance with the framework concepts and the measurement
and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and to also, as a
minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting
policies applied in the preparation of the consolidated financial statements from which the
summary consolidated financial statements were derived are in terms of International Financial
Reporting Standards and are consistent with those accounting policies applied in the preparation of
the previous consolidated annual financial statements, except for the effect of the adoption of IFRS
15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments with effect from 1
April 2018.


AUDIT REPORT
This summarised report is extracted from audited information but is not itself audited. The annual
financial statements were audited by PricewaterhouseCoopers Inc., who expressed an unmodified
opinion thereon. The audited annual financial statements and the auditor’s report thereon are
available for inspection at the company’s registered office.

The directors take full responsibility for the preparation of the abridged report and that the
financial information has been correctly extracted from the underlying annual financial statements.

PREPARER
These results were prepared by N Naidoo CA(SA) under the supervision of EC De Kock FCMA.

GOING CONCERN
The directors have reviewed the group’s budget and cash flow forecast for the year to March 2020.
On this basis and considering the group’s current financial position, the directors are satisfied that
the group will continue to operate for the foreseeable future and have adopted a going concern
basis in preparing these reviewed provisional financial results.


ISSUE OF AUDITED ANNUAL FINANCIAL STATEMENTS AND ANNUAL GENERAL MEETING
In compliance with section 3.22 of the JSE Listing Requirements shareholders are advised that the
Company’s 2019 integrated annual report, which incorporates Etion’s consolidated financial
statements for the year ended 31 March 2019, was posted to shareholders on Wednesday, 31 July
2019. Shareholders are further advised that the integrated annual report will be made available


                                                                                          Page 8 of 9
on the Company’s website (www.etion.co.za) on the same day.

Notice is hereby given that the annual general meeting of the shareholders of Etion will be held on
Thursday 26 September 2019 at 10h00 at 85 Regency Drive, Route 21 Corporate Park, Irene,
Pretoria to deal with the business as set out in the notice of annual general meeting forming part
of the annual report.


Record date for the purpose of determining which shareholders are entitled to receive the notice of
annual general meeting; Friday, 26 July 2019


Mailing of integrated annual report; Wednesday, 31 July 2019


Last day to trade for the purposes of being entitled to attend, participate in and vote at the annual
general meeting; Tuesday 17 September 2019.


Record date on which members must be recorded as such in the register; Friday,20 September
2019


Proxy forms to be lodged with the transfer secretaries by 10:00 Monday, 23 September 2019*


   * Any form of proxy not delivered to the transfer secretaries by this time may be handed to the
chairman of the annual general meeting prior to the commencement of the annual general
meeting.




By order of the board

Teddy Daka                                                       Elvin De Kock
Chief Executive Officer                                          Chief Financial Officer
31 July 2019


Directors
CP Bester; T Daka (CEO)*; Dr. SJ Khoza; EC De Kock* (CFO); MJ Janse Van Rensburg ; RC Willis ;
C Maherry*
*Executive
Company secretary
Fusion Corporate Secretarial Services (Pty) Ltd
Telephone: +27 12 749 1800
Facsimile: +27 12 665 2767
Website: www.etion.co.za
Registered office: 85 Regency Drive, Route 21 Corporate Park, Irene, Pretoria 0157
                            (PO Box 95361, Waterkloof, Pretoria)
Designated adviser: Exchange Sponsors 2008 (Pty) Ltd
Transfer secretaries: Computershare Investor Services (Pty) Ltd
https://senspdf.jse.co.za/documents/2019/jse/isse/etoe/Abridged.pdf




                                                                                           Page 9 of 9

Date: 01/08/2019 08:34:00
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